Chinese regulators quashed a Bloomberg story that said China would slow down or halt its purchases of US treasuries -- a story that on Wednesday had knocked long-dated treasuries and boosted 10-year bond yields and rival safe-haven gold.

The news of the denial partly reversed a spike in US 10-year treasury yields.

“The news could quote the wrong source of information, or may be fake news,” China's State Administration of Foreign Exchange (SAFE) said in a statement, according to Reuters.

It has been something of a wild week for rates and currencies because a breakout in US yields was already under way earlier this week before the China story hit, propelling yields even higher, and then came the denial, says Hardy.

News of the denial only partly reversed a spike in US 10-year treasury yields, with the benchmark yield clinging above 2.5%.

Gold seesaws

The story about China losing its appetite for US treasuries had also spurred gold higher, on expectations that the Chinese government could need to diversify into the precious metal, but that prospect, too, was dashed.

"It did create quite a lot of stir in the metal markets, especially gold," says Saxo Bank's commodities strategy chief Ole Hansen. "But since then gold has calmed down a bit."

Underlying support
for gold remains in an area of $1,291 to $1,300/oz, but gold could struggle to proceed without a proper correction, Hansen says.

Meanwhile, crude oil prices got a boost from Wednesday's EIA report, which showed a drop in both stocks and
production last week.

“The [oil] market is settling down a bit, waiting for the next big news for the energy market,” says Hansen, adding that the next blast of news could come as soon as Friday, which is US President Donald Trump's deadline for deciding whether to continue to waive the sanctions against Iran that were lifted after the July 2015 nuclear agreement.

"We never know what Trump decides," Hansen says. "If they do reintroduce sanctions, it could have a bullish impact on oil."

Brent crude oil is chasing the 2015 high at $69.60/barrel, while WTI crude is holding above the 2015 high and taking aim at $66.90/b, Hansen says.

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